Integrated Report 2019 - SATO HOLDINGS CORPORATION - SATO Global
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Securities code: 6287
Integrated Report 2019
SATO HOLDINGS CORPORATION
www.satoworldwide.com
Contents SATO Values
SATO Values 2
Instilling corporate values in employees 3 Corporate
Teiho 4 motto
Our journey of tackling changes and challenges 5 Akunaki sozo — Ceaseless Creativity
What SATO aims to be 7
page 11
SATO by the numbers 9
Mission Our mission is to create new value for our customers through products and services of superior quality,
From the President and CEO 11
and to contribute towards a better and more sustainable world.
Sustainability framework 17
Our business model 25 Vision We aim to be the leader and most trusted company in the auto-ID solutions industry worldwide,
exceeding customer expectations in an ever-changing world.
Our wide coverage of markets, industries and applications 27
Our products and services 29
Credo • We inspire changes, new ideas, and the courage of promoting customer-centric innovation
Actions for sustainable business growth 31 in the spirit of Ceaseless Creativity.
page 17 • We seek to be true professionals by constantly striving to exceed the expectations of our customers.
Latest in solutions 39
• We see things as they are, and do the right thing right away.
Latest in alliances 40
• We show respect for all individuals, extend trust to each other,
Taking new challenges 41 and work together as one cohesive team.
From the CFO 43 • We enable a vibrant and open-minded workplace, eliminating the formalities
that cause “Big Company Disease.”
Corporate governance 47
• We share the returns from our business with our four stakeholders: shareholders, employees,
From our external directors 53 society and the company.
Management team 55
page 31
Financial review for FY 2018 57
Financial summary 59
Stock information 61
Corporate data 62
Basics of auto-ID technology 63
SATO terminologies 64
page 47
Editorial concept
This report is the record of the tangible and intangible aspects of the SATO Group’s medium- to long-term value-creation story through its core
business of auto-ID solutions.
2
Instilling corporate values in employees Teiho
Where change always began for over 40 years
Spreading SATO Values (our corporate philosophy)
We are undertaking activities to impart our Credo to SATO One of the biggest such activities is the SATO Values
Group employees around the world for them to put its Workshop held at countries/regions where our group
principles into daily practice. We believe these efforts help companies operate. Local leaders work off of the training
us drive “Change and Action” that we need in business, program that we develop every year to facilitate workshops
deliver our Vision, and take us closer to fulfilling our Mission in their local language. Workshop materials are translated
Founder Yo Sato started the Teiho reporting system in better and on how to put them into action, drawing from
to “contribute towards a better and more sustainable world.” into 15 languages, while the SATO Values pocket leaflets
1976 from the belief that management alone cannot run customer feedback or market information they obtain
Over 50 promotional leaders chosen from group we distribute for employees to carry around with their
the company and keep it growing; every employee should from their field of operations. These Teiho reports that
companies worldwide serve as “ambassadors” to spread employee ID cards are printed in English on one side and
pitch in for the company to contribute to the global society. are submitted daily to top management serve as
the spirit to their local colleagues through various activities. local language on the other. Teiho is a system for employees to submit original ideas, our driving force for making important business decisions
innovations and proposals aimed to make the company and changes.
Scenes from a SATO Values Workshop
Comments on report and sends Top Growing database
out instructions for relevant
departments/members to follow up management of over
Requests improvement
8 million entries
Take action
Ideas
Report on original ideas,
Credo Awards World Cup Employees
innovations and proposals aimed to
make the company better and
Used in daily work
on how to put them into action
We hold an annual event in which we recognize individual where they would present their episodes on the Credo Awards
employee behavior over the past year that lived up to World Cup stage, to receive votes for the Best of the Best.
our Credo. We are seeing more employees enter the contest every
Each group company collects entries from its year, with more entries involving highly Credo-compliant
employees for nomination to the global competition, in actions than ever. After the World Cup, finalists return to
which group company heads and values promotion their workplaces brimming with confidence, motivation and
Our means of
leaders vote to shortlist the finalists.
Finalists are invited to the annual SATO Group Summit,
growth, bringing renewed energy to their teams.
participatory management
Submission form
Credo Awards World Cup
Top management comments/sends instructions
on ideas submitted
Web
For more about Teiho, see:
http://www.satoworldwide.com/sato-group/teiho-system.aspx
3 4
Our journey of tackling changes and challenges
The SATO Group had always wanted to “do something” to
make work easier for workers at factories, warehouses and
manufacturing and selling products. As SATO turns 80
next year, its business will keep evolving over time,
Our challenge continues
stores, which led to the creation of its bamboo processors, but the founding spirit to support people working at the
hand labelers and barcode printers. Today, it focuses more
on solutions while continuing the business of creating,
very site of operations will always remain an integral part
of its culture. into the future
1940 1964 1990s
SATO founded Started production of labels Established DCS & Labeling
Started manufacturing and sales of Began hand labeler labels production for solving customers’ problems on site
bamboo processors. in-house to ensure stable printing and
SATO shifted its focus to selling solutions to help Global
application quality. Since then its production
capabilities have evolved to cater to diverse
customers in diverse industries collect various
data on their operations for subsequent processing
solutions
needs (e.g., heat-resistant labels for steel,
in their core IT systems. It named the business provider
environmentally friendly options).
model DCS (Data Collection Systems) & Labeling.
Past Present Future
1962 1981 2010s
Sustainable
Invented the world’s first thermal
Developed the world’s first Enhanced the business model to
world
hand labeler transfer barcode printer DCS & Labeling +One
Helped retail stores cut down on the time and Met the growing needs for accuracy and to solve problems faced by business leaders
the trouble of applying price tags. This was labor savings as use of point of sale (POS)
In 2000s, enterprises started to face common
the inception of tagging — SATO’s important systems spread in supermarkets.
pain points such as productivity and labor
business domain and foundation. SATO went on to develop various
shortages. To better address these problems
printers that would serve not just retail 2014–15
and create value for our customers, SATO
but a wide range of industries Launched IoT-ready CLNX series printers
started partnering with other companies to
including logistics, manufacturing Started offering SOS (SATO Online Services),
combine various auto ID technologies, laying
and health care. an IoT-enabled maintenance system
foundation for our solutions business today.
2017
Fully started in-house production of original
RFID consumables
Launched IDP (Inline Digital Printing) business
Evolving the business to meet changing needs
SATO
Products that meet the needs of the era DCS & Labeling More advanced auto-ID solutions
business
Time-proven strengths of tagging on site Uncompromising commitment to product and value creation
Changes in
Rise of supermarkets Spread of barcodes Complex issues at Universal pain points in management Diverse consumer preferences Growth of IoT
society customer sites
5 6
What SATO aims to be
The world today turns to IoT and AI to seek ways to solve societal challenges arising from more
Sustainable
diverse supply chains, greater demand for safety, and mounting demographic concerns. world
By using this as an opportunity to expand our business worldwide on “selling the solution” to
support information tagging for a wide range of markets and industries, we aim to grow ourselves
into a global solutions provider that contributes to a better and more sustainable world.
FY 2019–21 SATO Group
Medium-term Objectives & Strategies
Concentrate resources on our auto-ID solutions business
Global solutions
Growth
(DCS & Labeling +One), and establish sustainable growth
and stable profits provider
Grow and evolve the auto-ID solutions business
strategy Strengthen and expand business through global alliances
Develop B2B2C business to create new consumer value
(Commercialize IDP solutions and new RFID technologies)
Selling the solution, not the product
The world around us (koto-uri)
Societal Technological
challenges innovations
Retail Manufacturing
IoT
More diverse FY 2025 targets
supply chains
(consolidated)
Tag
information
AI
Food &
Sales:¥ 200 billion
Health care
Greater demand
to things & people beverage Operating income: ¥24 billion
for safety Opportunities
5G
Relevant
SDGs
Shift in
demographics
Sensors Genbaryoku
See Page 64.
Public Logistics A global solutions provider that
Climate change
Robotics
contributes towards a better and
Auto-ID solutions business
Creating “unbeatable offerings”
more sustainable world
(best-in-class solutions, products, services, devices)
Sustainability — Value creation for customer & SATO —
Corporate governance — Focus on overseas subsidiaries —
7 8
SATO by the numbers
Market share for variable Market share for
Performance highlights information labels barcode label printers In business for
The SATO Group closed FY 2018 with sales at ¥116.2 billion (up 2.5% year on year),
operating income at ¥7.7 billion (up 22.9%) and profit attributable to owners of parent at
¥3.8 billion (down 7.4%). Both our Japan and Overseas businesses raised their sales and
No. 1
worldwide
No. 2
worldwide
80 years
(as at FY 2020)
OI performances from last year, pushing respective figures to record their highest ever in * SATO estimate * Source: Chunichisha. “Whole Picture of
the Printer Market Report 2019.”
our core auto-ID solutions segment and on a consolidated basis.
Financial Non-financial
Sales & operating income Profit attributable to owners of parent & ROE Per capita productivity Turnover of new graduate hires within 3 years &
Sales ROE FY 2017 saw extraordinary income owing to
average length of service (Japan only)
116,179million 6.9%
Sales continued to grow, while OI for Japan sale of fixed assets, while FY 2018 reflected
Greater efficiency in sales and operations heightened Early-career trainings continue to lower turnover, while
and Overseas improved by 20% in FY 2018. impairment loss at an overseas subsidiary. POINT POINT
profitability, raising per capita productivity as well. employees, on average, continue to serve the company longer,
(Millions of JPY) (Millions of JPY) (%) owing to enhanced initiatives to improve work-life balance.
113,383 116,179
120,000 12,000 5,000 10 (Millions of JPY) (%) (No. of years)
105,504 106,302 14.6 14.6 14.9
99,831 3,763 4,074 13.8
3,773 2.00 1.93 30 13.4 15
7.6 3,687
4,000 8
90,000 7,679 9,000 3,221 7.6 6.9 1.84
7,444 7.1 21.8
6.2 1.81 19.6
6,455 6,104 6,249 3,000 6
1.80 20 10
60,000 6,000 1.69
1.75 13.3
2,000 4
13.2
30,000 3,000 8.0
1,000 2 1.60 10 5
0 0 0 0
(FY) 2014 2015 2016 2017 2018 (FY) 2014 2015 2016 2017 2018
0 0 0
Sales (left axis) Operating income (right axis) Profit attributable to owners of parent (left axis) ROE (right axis) (FY) 2014 2015 2016 2017 2018 (FY) 2014 2015 2016 2017 2018
Per capita productivity = Operating income plus goodwill amortization and ERP system Turnover of new graduate hires within 3 years (left axis)
Free cash flow EBITDA margin depreciation per working employee Average length of service (right axis)
We continue to increase free cash flow
after investments on an ERP system Earnings before interest, tax, depreciation and Board size & ratio of external directors Patent utilization rate (Japan)
4,152million 11.4%
(now in successful operation) had impacted amortization rose to its highest ever, with its
FY 2015 figures. margin growing a full percentage point. We have increased the ratio of external directors on our Our conscious efforts to obtain patents that create customer
POINT board since first adding in 1999. External directors now POINT value have kept our utilization rate growing to exceed the
(Millions of JPY) (%)
account for the majority of our board, reflecting the industry’s average since FY 2017.
11.1 11.4
6,000 12 11.0 10.6 growing need for board independence.
10.4
4,152 (No. of directors) (%) (%)
4,000 2,983 15 14（2） 100 100
2,679 9
2,052
2,000 12 11（5） 11（6） 80 80 72.1
10（4） 65.2 67.1
-3,504 6 63 59.1 56.1
0 9 （5）
8 60 60
55
54.1
3 45 35.9
-2,000 6 40 40 40 44.0
28.0
-4,000 0 3 14 20 20
(FY) 2014 2015 2016 2017 2018 (FY) 2014 2015 2016 2017 2018
0 0 0
(FY) 2002 2004 2010 2016 2019 (FY) 2014 2015 2016 2017 2018
Capital expenditures & depreciation Dividends per share
Internal directors (left axis) External directors (left axis) SATO’s patent utilization rate*1 Electrical machinery manufacturers*2
Capital expenditures took an expected drop
Capital expenditures Ratio of external directors (right axis) *1 Based on date registered *2 Utilization rate of (owned) patent rights
from FY 2017 that saw surge in spendings
Figures in parentheses: No. of external directors Source: In-house records Source: Japan Patent Office Annual Reports 2015–2019
4,801million ¥70
on production enhancement and plant We continue to increase dividend payout at
relocation. Depreciation increased slightly. steady increments.
(Millions of JPY) (JPY)
10,000 9,044 80
65
70 The 2019 Intellectual Property Achievement Awards
7,372 60
8,000 55 Since its early days, SATO has always understood the importance of patents,
6,717 60
5,723 45 with which it has protected numerous aspects of its proprietary technologies.
6,000 4,801
4,307 4,489 Conscious efforts to obtain patents that lead to customer value have improved
3,941 3,996 40
4,000 our implementation rate by 30 percent over four years, and won us the
2,500 Commissioner of the Japan Patent Office Award from the Japan Patent Office
20
2,000 (Japan Ministry of Economy, Trade and Industry) in FY 2019 as a recognition of
our contributions toward effective utilization and development of the nation’s
0 0 IP rights system.
(FY) 2014 2015 2016 2017 2018 (FY) 2014 2015 2016 2017 2018
Capital expenditures Depreciation
9 10
From the President and CEO
Highest-ever sales We recorded highest-ever consolidated figures for FY 2018 at sales of ¥116.2
and OI accelerates our billion and operating income of ¥7.7 billion.
commitment to The strong performance proves that our strategic efforts in Japan since
FY 2016 to “sell the solution, not the product” (koto-uri) for each industry are
“sell the solution”
succeeding. This method of offering ideal combinations of printers and
matching products with real, measurable benefits for sites of operation is
a business that brings high value-add to our customers while bolstering our
own profitability as well.
Outside Japan, sales have largely grown in our base business of printers
and consumables, but time taken in the Americas and Europe to shift their
strategies had caused us to miss our initial targets. We also admit that we’re
still not generating synergies we initially intended with our global subsidiaries
acquired through M&As. Our global companies would obviously start realizing
their potential once they have built their business around solutions, so I will be
pushing this shift to koto-uri as a core strategy to develop our global sector into
a major pillar of the group’s business.
R&D for our IDP business that we aim to commercialize as a new
technology in FY 2019 is largely going as planned and we have started
consumer trials. We’re excited about the enormous possibility this B2B2C
We aim to step up growth to become a global business offers retailers and brands for greater engagement with consumers.
solutions provider that contributes towards
FY 2018 performance (Sales and OI figures are compound annual growth rates)
a better and more sustainable world Consolidated* Overseas Japan
Against FY 2016 Against FY 2016 Against FY 2016
Ryutaro Kotaki Sales +4.5% Sales +5.5% Sales +3.8%
President and CEO
Operating income +12.2% Operating income +16.5% Operating income +23.6%
Operating margin 5.7 % → 6.6% Operating margin 4.2 % → 5.2% Operating margin 6.8 % → 9.6%
(Millions of JPY) (Millions of JPY) (Millions of JPY)
Management policy 116,179
113,383 42,585 43,316 72,435
106,302 70,482
Perfect the basics, collaborate, 38,926 67,283
6,982
take new challenges 5,831
7,679
4,571
Growth strategy 6,104
6,249 2,239
1,865
Concentrate resources on our auto-ID solutions business (DCS & 1,650
Labeling +One), and establish sustainable growth and stable profits
1. Grow and evolve the auto-ID solutions business
2. Strengthen and expand business through global alliances (FY) 2016 2017 2018 (FY) 2016 2017 2018 (FY) 2016 2017 2018
3. Develop B2B2C business to create new consumer value Sales Operating income Sales Operating income Sales Operating income
(Commercialize IDP solutions and new RFID technologies) * Includes the IDP business
11 12
From the President and CEO
Competitive advantage We offer the best auto-ID solutions for fields of operation in a variety of industries,
working off of our know-how in tagging information to things and people.
Our strength in this business is none other than what we call genbaryoku.
Riding the winds of change It consists of three elements: (1) The ability to integrate printers, consumables,
to be where we hope to be technologies and services into optimal solutions based on our experience
hearing out customers’ pain points directly at their site of operations;
(2) The ability to cover a wide span of markets, industries and applications
with our solutions, powered by our accumulated knowledge of customer fields;
(3) The ability to offer maintenance services conscientiously after installation
to establish deep, lasting relationships with customers.
This genbaryoku — literally “on-site competency” — together with our R&D
prowess to create unbeatable products and services shapes our solutions
business, which, with our collaborative partnerships with system integrators,
What we aim to be The world today turns to IoT and AI to seek ways to solve societal challenges prove to be the ultimate differentiator and our competitive advantage.
arising from more diverse supply chains, greater demand for safety, and
mounting demographic concerns. This trend is an enormous opportunity for us
to grow our business that provides auto-ID solutions to a wide range of fields Differentiation
including retail, manufacturing, food & beverage, logistics and health care.
It’s with this tailwind and our strategic positioning in “tagging* on site” that we
SATO as a “customer-centric”
would expand our business worldwide on “selling the solution” to become a solutions provider
global solutions provider that contributes to a better and more sustainable
world while also priding ourselves as a quality manufacturer.
* The physical process of attaching identifier data to things and people. SATO is committed to tagging a
See from
Major providers of ERP,
System Sees from
diverse range of objects handled by different businesses, drawing upon a wealth of practical, technical
top down
System integrators* WMS, MES, etc. Compe-
integrator- top down
know-how in auto-ID solutions backed by genbaryoku. tition
function
Win-win Partnership
Our aim
A global solutions provider that contributes towards
a better and more sustainable world solution service
Competitor’s
Selling the solution, not the product (koto-uri)
The world around us Compe-
solution service
Manufac-
Retail tition
turing
Societal challenges Global
solutions Tag information
More diverse supply chains, to things & people
greater demand for safety provider
...and more
Health Tag information Food &
care to things & people beverage
Unbeatable offerings Exquisite products, services,
Technological devices & solutions
innovations Opportunities Growth
Sustainable Selling
IoT, AI, 5G, the product
world
sensors, robotics Genbaryoku • Integration • Field coverage
Public Logistics • Maintenance Channel sales
Sees from
(via business partners)
bottom up
See Pages 7-8. * Companies that provide comprehensive services on consulting, designing, developing and implementing
IT systems and selecting hardware that comprises them.
13 14
From the President and CEO
Business is built on talent Business can expand only with good talent, which is why we have been working
to foster talent who can put our Credo into action. We instill our corporate values
in employees worldwide with the help of promotional leaders selected from
More stakeholder dialogue,
group companies around the world. It’s this groundwork that allows us to focus
on our strategy to become a global provider of solutions that perfectly match more engagement
operational issues of our customers and push koto-uri forward.
This focus on koto-uri specifically starts from reinforcing our service support
teams that have actual contact with the customers. Sales teams would then be
able to collaborate with them to access information on customers and their
needs to derive more appealing solutions. And project leaders versed in
a particular industry would further the collaboration by sharing with global
employees the latest case examples of new needs and solutions that have
developed from market trends and law revisions.
Positions for such talents needed outside Japan will be filled by hiring To have our stakeholders better understand these and other unique strengths
mid-career professionals with proven track records, as well as by sending of SATO, I will seek to create more opportunities for dialogue and engagement
specialists with industry expertise to countries in need to transfer the know-how. with you going forward.
We will also be hiring more engineers and staff at the local level. In closing, I must also add that, after formulating our basic policy on actions
for sustainability last fiscal, we went on to identify material issues in our business
Governance, the foundation Effective June 2019, we have downsized our board of directors from 11 members management which may impact our value propositions to customers or
for growth to eight. This change allows us to make decisions faster, while the higher environmental conservation. We have started applying such materiality priorities
proportion of external directors brings more objective insight into decisions and this fiscal, while aligning our sustainability efforts with the ten principles of
ensures more transparent governance. the United Nations Global Compact.
As we believe that external directors are key to heightening effectiveness Lastly, on dividend. Total dividend per share for FY 2018 was ¥70, up ¥5 from
of the board, we are making efforts to enhance the support we provide them. the previous fiscal. As we anticipate investment in our growth-potent global
An example is holding pre-working sessions prior to board meetings for business this fiscal, we plan to keep the dividend increase modest for FY 2019
executive officers and business segment leaders to update external directors at ¥3 for a total ¥73 per share for the entire fiscal.
on current business standings and answer their questions in advance. We also On behalf of the entire group, I ask for your unchanging support as
have a Business Risk Committee reporting directly to the board to discuss SATO continues its quest for global, sustainable growth through its auto-ID
strategically important matters such as new investments and M&As, and to solutions business.
submit advice to the board so that external directors can make management
decisions quickly and appropriately together with their board counterparts.
Greater engagement I feel that I have yet to fully convey the true essence of SATO’s unique business
model to our stakeholders. The value we provide our customers — e.g., better Ryutaro Kotaki
productivity — is largely universal, so our business is highly resilient to risks President and CEO
stemming from surrounding changes. In fact, there’s a global variety of
opportunities out there for us because our auto-ID solutions business is
capable of adapting to megatrends around us to address the deeper, intricate
needs of different markets, industries and applications. We have seized these
opportunities in Japan to develop a diverse portfolio of profitable solutions;
it’s now time for us to do the same beyond Japan, to expand our portfolio and
heighten our business resilience even further.
15 16
Sustainability framework
The SATO Group’s Mission is to “contribute towards a better and more sustainable world,”
which is why sustainability is inseparable from our business. In line with SDGs (Sustainable
Development Goals) and other global agendas of growing interest and through materiality Materiality map
Value to be delivered to customers Groundworks to value creation Environmental responsibility
assessment, we have taken actions on our basic policy for sustainability, which was set forth in
2018 to clarify sustainability principles that matter most to our business and stakeholders. Greenhouse gas emissions
Very high
Efficient use of resources Productivity improvement
Basic policy for sustainability
Harmony with nature Supply chain management Peace of mind
Sustainability goes hand in hand with customer value creation and corporate value enhancement,
1 Create value which we consider the fundamentals of company management. Waste reduction
Importance to stakeholders
Safety & quality assurance
2 Keep to our business We achieve sustainability through our business.
Stakeholder engagement Product sustainability
3 Make it duplicable Our sustainability initiatives shall be duplicable over time or across the Group.
Harmony with society Diversity & inclusion Talent development
4 Align with the actual situation The actual situation of our business operations shall reflect our ideas for sustainability. Human rights & labor practices
Health & safety at work Workstyle innovations
5 Enhance disclosure We shall disclose sustainability-related information to fulfill our accountability to stakeholders.
High Influence on SATO’s business Very high
Our concept of materiality Corporate governance, risk management
We identify our materiality agendas by their relevance to and supply chain management, and C. Environmental
three areas: A. Value to be delivered to customers, as responsibility. These areas stand on the basis of corporate
associated to our core business of auto-ID solutions, B. governance and risk management. Our process to identifying materiality
Groundworks to value creation, e.g., talent development
We started by forming a sustainability committee involving resource development functions. After studying principles of
departments that manage the environmental, social and the United Nations Global Compact, international guidelines,
Materiality overview governance aspects of our business, as well as departments and a plethora of case studies, we were able to identify
that are involved in investor relations, public relations or other important issues that could affect our stakeholders and
A What we aim to offer through our core business to help customers cope with societal challenges
forms of engagement with our stakeholders. This committee business to plot them into a materiality map. Going forward,
B What we undertake internally/externally to enable the continuous creation of customer value
took charge of holding multiple discussions and workshops we will work to review these material topics continuously by
C What we do to protect the global environment where we live and do business attended by the management team and members from reaching out to a wide spectrum of stakeholders.
D Underlying foundation our sales, R&D, production, product planning, and human
A Value to be delivered to customers B Groundworks to value creation C nvironmental
E
responsibility
Waste reduction Productivity improvement Talent development Diversity & inclusion
Peace of mind Product sustainability Stakeholder engagement Supply chain management Greenhouse gas emissions
Safety & quality assurance Workstyle innovations Harmony with society Efficient use of resources
Human rights & labor practices Health & safety at work Harmony with nature
D Corporate governance, risk management
One of our sustainability workshops
17 18Sustainability framework
Delivering customer value
Relevant SDGs
Value to be delivered to customers is a key priority
in our material agendas that is closely linked to our
core business of customer-centric auto-ID
solutions. Our lineup of sustainable products and
services can offer customers benefits that include resources, and enjoying reassurance and
minimizing environmental impact, saving labor and continuous quality improvements.
Waste reduction, productivity improvement
Product sustainability and peace of mind
Taking action to combat climate change and its impacts is notably in how we provide labels without release liners or Our auto-ID solutions allow customers to collect data and optimizing supply chains, they also aim to improve the quality
an important agenda for not just SATO but our customers use paper materials from FSC® (Forest Stewardship Council) automate their operations to visualize inventory and reduce of food & beverage and health care operations to offer peace
as well. We support customers in reducing their ecological certified forests. waste. In addition to streamlining business processes and of mind to our customers and the consumers they serve.
footprint through product and material sustainability,
Safety and quality assurance
At SATO, safety and quality are matters to consider at maintenance support service. As SOS offers at-a-glance
the product/service planning stage as well as in the later visibility of all connected printers and their status of
phases of the supply chain (such as production, distribution, operation/use, customers can use the service to manage
NONSEPA® retail and maintenance). For example, when we include their assets with similar ease.
Linerless labels
‘ease of maintenance’ in our product idea at the planning We also monitor the performance of our products and
stage, we essentially lighten the workload of maintenance services once they are launched, to investigate root causes
staff and reduce unnecessary stoppages on site, improving and make prompt improvements when problems occur to
Linerless the services we provide to our customers post-sales. enhance their safety and quality. We will also incorporate
label In addition, we pay attention to preventative maintenance customer feedback by acting on requests and other data
and quick recovery from errors, as shown by SOS (SATO collected through surveys.
Online Services), our cloud-based printer fleet remote
Linerless means less paper used at point of production and less CO2 emission at
point of disposal, since no liner waste is left behind for incineration. Label
with
Awarded the Carbon Footprint of Products (CFP) certification liner
NONSEPA® is the first product in the Japanese label industry to earn CFP certification.
CFP is a program to display the carbon footprint of products (measured by greenhouse
emissions generated during their life cycle and expressed in mass-based CO2 equivalents)
on their packaging so as to raise environmental awareness and further reduce emissions.
19 20Sustainability framework
The SATO Group
Groundworks to value creation Declaration of Diversity
SATO Group is committed to providing a working environment where all
Relevant SDGs
employees regardless of race, ethnicity, gender, nationality, culture, religion,
educational background, disability or age are able to fully engage in open
Our actions in-house in the areas of talent
dialogue and active participation while recognizing and respecting each other’s
development, diversity/inclusion and health and unique attributes.
productivity management, as well as outside the We believe this helps us create a diverse corporate culture that inspires the
generation of new ideas. In line with our corporate spirit of Ceaseless Creativity,
company in supply chain management and we will continue to refine our diversity activities in daily work as the core of our
stakeholder engagement form the foundation on manage and optimize the supply chain. Regular, business strategy.
Our goal is to foster and promote diversity by giving every individual
which we can continue to create value for our ongoing dialogues with stakeholders and their
employee the opportunity to grow and excel professionally. This approach is key
customers. We play our part in responsible opinions allow us to keep improving our management to delivering the best possible solutions to meet the diverse needs of our global
procurement, working together with suppliers to operations and enhance value of the company. customers. Diversity opens the door to productivity, competitiveness and
sustainable growth.
Talent development, diversity and inclusion Health and productivity management
We foster talents who demonstrate our core strengths of self-starters. The resulting corporate culture, which breeds To ensure good health and well-being of SATO employees calls “The 3G actions for well-being”: 1) Greet with a smile,
genbaryoku and corporate values. In 2019, we defined innovative ideas much in line with the company motto at their workplaces, SATO Group promotes health and 2) maintain Good condition (physically and mentally), and 3)
competencies required for each manager level that was “Ceaseless Creativity,” embodies the notion of diversity productivity management, with a chief wellness officer put do a Great job (with high productivity).
immediately incorporated into our new 360 degree and inclusion. Being one of the pioneers in Japan to raise in place. SATO encourages employees with metabolic
appraisal process. Corporate values are another requisite our mandatory retirement age, we were recognized at the syndrome to exercise regularly, and conducts surveys to
Recognitions
we try to instill around the world through workshops. second Enjoy Aging Award in 2018 (organized by a local measure employee satisfaction. Our efforts have won us
We also build and maintain a working environment that consortium for future society creation) for our efforts in Health and Productivity Stock recognition in 2017 and White
encourages individuals to respect one another and be fighting age discrimination. 500 designation for three consecutive years from 2017 to
2019. SATO also started flexible working hours and
HR roadmap telecommuting, along with a new key performance indicator
of per capita operating income that measures productivity.
Health and Productivity Diversity Management Selection 100
Aim To make SATO full of talents who practice genbaryoku and its underlying SATO Values to create and deliver customer value that add to the growth of our business.
This year, SATO announced new behavioral guidelines it Management 500 (White 500)
Completed FY 2019 FY 2020 FY 2021 or later
Instill SATO Values
Conduct SATO Values
workshops (Europe, North Strengthen talent management and governance Stakeholder engagement
and South Americas,
Asia, Oceania)
Install a global grading system
SATO added to the SNAM Sustainability Index
Define competencies (for heads of subsidiaries outside Japan)
Formulate concept for talent Conduct 360 degree feedback (for heads of subsidiaries outside Japan)
We maintain active dialogue with investors and other We have been named to the SNAM Sustainability Index set by
management based on Establish compensation setting process (for heads of
Prepare to start a globally standardized compensation scheme (for heads of subsidiaries outside Japan)
subsidiaries outside Japan)
stakeholders, receiving valuable suggestions on how we
Worldwide
global grading Sompo Japan Nipponkoa Asset Management Co., Ltd.
Prepare to start globally standardized manager trainings
Install a globally standardized
KPI management system (for Prepare to start talent management could improve our management. Each year, we hold two (SNAM). The index is used for SNAM Sustainable Investment
Fund, which is a socially responsible investment product for
heads of subsidiaries outside
Japan)
Prepare to start succession plan financial results briefings for institutional investors and
Stipulate new expatriate rules pension trusts and institutional investors that invest in a broad
Revise expatriate rules analysts, over 200 individual meetings with them, and range of companies (approx. 300) rated highly for their
Implement new expatriate process and management
and processes
Invest in koto-uri talents, starting with Asia
Draw up plan for a global mobility policy
briefing sessions and small meetings on a wide range of environment, social and governance (ESG) practices.
Pilot program to train Train local employees for a global career
overseas employees at topics to facilitate direct conversations between
Japan headquarters
Implement English proficiency program for local employees
Draw up plan for global benefit management
Briefing sessions and small meetings
stakeholders and our CEO, investor relations officers,
Design new HR system
Install new HR system for managers
Implement training programs for grade-specific competencies and for managers under new HR system business unit heads and external directors. These
for managers Install competency framework
Implement 360 degree feedback based on grade-specific competencies opportunities help us optimize company valuation and lower
Establish competency
framework Prepare to start succession plan
capital cost.
Prepare to start globally standardized manager trainings
Devise strategy to motivate
mature employees Enhance talent and career development programs
Japan
Define workstyle guidelines Prepare to start talent management
by department
Apply Big Data analytics to talent management Earnings briefing Briefing for individual investors
Introduce talent
Verify effectiveness of workstyle innovation Run results-oriented work practices
management tool Prepare to start new workstyle for reorganized headquarter structure
Seek interested candidates for Run diversity and inclusion initiatives (e.g., focal measures for long-serving and female employees; committee for increased job satisfaction)
overseas job
Develop koto-uri talents outside Japan, especially in Asia
Promote the use of English
Implement English proficiency programs based on department-specific goals
21 22Sustainability framework
Being environmentally responsible
Relevant SDGs
We recognize environmental protection as a priority
common to humankind, as well as an essential
factor to sustaining our business. Our environmental
policy guides us towards reducing environmental
impact, providing greener products and services,
and running our business in harmony with
the environment.
Greenhouse gas emissions
Collecting and recycling printers
Reducing CO2 emissions is essential to tackling global Referring to the medium-term target specified for our standard operation since 2007. In FY 2018, we
warming and making our society sustainable. We understand Japan in the Paris Agreement*, we have set the following recycled 38 percent more printers than we did the previous
Customers
that we are responsible for the environment, and work to goals in reducing environmental impact of our year. To further increase recycle rates, we have started
monitor the carbon footprint of our business and promote business activities. taking actions since July 2019 to set up a customer Send
Printer
Sales offices, support centers
tangible initiatives to stop global warming. support framework for printer collection and streamline collection
* I nternational agreement to combat climate change, adopted at COP21 on
Printer
December 12, 2015. in-house processes via the CRM system. collection
Dismantle
East Japan Maintenance Center & sort
Medium- to long-term targets and progress
Metals, motors, rubber, plastic, PCB, etc.
FY 2018 FY 2019 FY 2020 FY 2030
Action items Target contributions Key indicators
results targets targets targets
CO2 emitted, • Material recycling • Conversion to RPF*
Reduce Scope 1 & Scope 2
Reduce Japan compared with Down 8.0% Cut by 10% Cut by 15% Cut by 26%
CO2 emissions *R
efuse Paper & Plastic Fuel (solid fuel produced from waste).
environmental FY 2013 (t-CO2)
impact of our Reduce Scope 1 & Scope 2 CO2 emitted, Recycling room Parts sorted by material
business activities CO2 emissions Overseas compared with Up 15.6% Cut by 6% Cut by 10% Cut by 26%
(Key production plants) FY 2015 (t-CO2)
Harmony with nature
In 2018, SATO joined Japan Climate Leaders’ Partnership should take actions to realize a sustainable, decarbonized One of our core businesses is consumables, which uses forestation program in October 2016.
(JCLP) as a supporting member to promote renewable society, with a sense of urgency. wood pulp to produce its main product line of labels. This We will continue to develop eco-friendly businesses and
energy. JCLP is a group of Japanese companies sharing Through our participation in this partnership, we are now is why we work to protect nature at a global scale in order take part in forestation programs to enhance environmental
the common understanding that the industrial sector looking at installing power generators for self consumption. to conserve biodiversity and restore the environment. awareness in our employees.
Since March 2014, SATO has been participating in the
Forest of Companies project that the Tokyo Development
Efficient use of resources Foundation for Agriculture, Forestry and Fisheries promotes
as part of its Pollenless Forestation* campaign. We sponsor
In order to realize a sustainable society, we must Whenever a customer switches to a new printer, we pockets of forest land in the Tokyo cities of Ome (since
transform from a linear to a circular economy, in which collect the old printer at no cost to disassemble it and 2014) and Akiruno (since 2019), naming these sites * Campaign to replace cedar and
cypress plantations to a new variety
resources are processed properly and circulated. As a recover the components or metals (iron, copper, brass, “Forests of Ceaseless Creativity” and managing them in of these trees that release less pol-
manufacturer, we make it our responsibility to put in stainless steel, aluminum, rubber, PCB, wires, waste our action to protect the forest ecosystem and its water len (1/100 of the existing variety). It aims to reduce airborne pollen that causes
allergic reactions, while regenerating forests, stabilizing wood supply and revi-
efforts for a circular economy. plastics, etc.) for reuse through recyclers. This has become sources. SATO was certified a contributor to the Tokyo talizing the forestry industry.
23 24Our business model
DCS & Labeling +One is SATO’s business model of delivering unbeatable
offerings we develop in-house or through external alliances together with
Core IT systems (e.g., ERP, WMS, MES*) third-party products in the form of solutions, to tag identifier information to things
and people so that core IT systems can process the data. Technological
Auto-ID solutions business innovations and universal challenges faced by our customers are our driving force
to building a lineup of solutions that can work for different industries. At the heart
DCS & Labeling +One
of this all is the genbaryoku of our employees who visit each customer site to
understand the operation and its challenges before coming up with a solution.
We will continue to solve challenges of the times with DCS & Labeling +One.
Tag information to things & people Customer-centric solutions
The world around us Our value creation
Unbeatable offerings
Technological Ensure
accuracy
innovations
IoT AI 5G Alliances
Save
Combination of mutual strengths Generation of new businesses labor
Sensors Robotics
Save
resources
SATO’s products/
services
Technical
Printers Consumables Software Consultation
Universal support
challenges Offer
reassurance
Safety
Productivity and peace Expenses
25c
3cm
of mind
Third-party Achieve
Compliance products 00.0g
sustainability
Sustainability with Staffing
regulations General purpose peripherals Specialized devices
Integration Build
Genbaryoku
emotional
Field coverage connections
Maintenance
Markets, industries, applications
Retail Manufacturing Food & beverage Logistics Public Health care
* ERP: Enterprise Resource Planning WMS: Warehouse Management System MES: Manufacturing Execution System
25 26Our wide coverage of markets, industries and applications
Wide coverage across
At SATO, we consider each market a global collective of different industries. For example,
the food & beverage market can be broken down into production, foodservice and many other market segment, industry
industries. Each market features a set of challenges which vary from industry to industry, and
we work to address them with optimized solutions that we build based on the industry-specific and solution application
knowledge and expertise we have accumulated over the years.
Retail Manufacturing Food & beverage Logistics Public Health care
Mass retailers Apparel stores Automotive Building & Iron & steel Food Fast food Hotels Warehousing E-commerce Municipal Leisure Law Pharmaceuticals Blood Medical
housing manufacturers restaurants enforcement bags equipment
Mail order Drugstores Chemical Electrical Restaurants Beverage Transportation 3PL Education Postal Hospitals Pharmacies
merchants equipment manufacturers
12.6% 35.2% 10.0% 26.1% 3.9% 12.2%
* Underlined figures denote respective share in SATO sales, Japan (FY 2018)
Examples of solutions for food manufacturers HACCP compliance
Food labeling Manage health and
Traceability
Our solutions can be used to automate operations and improve Print food labels hygiene conditions of Traceability
food handlers Weigh and batch
data efficiency in all processes ranging from incoming inspection ingredients Check mix of Automation
ingredients
to inventory management. Pack shipments
Apply shipping labels
Traceability
Automation Food labeling
Control inventory
Print
Print
labels
labels
forfor
imports/exports
imports/exports
Enable labeling flexibility to meet different needs Traceability
Improve accuracy and speed in packing and labeling goods for shipment Food labeling
Receive ingredients HACCP compliance
Receive ingredients Control temperature of
Food labeling Traceability fridges/freezers
Support multiple languages in printing/applying labels for imports/exports
HACCP compliance
Check for food contamination
HACCP compliance Traceability
HACCP compliance
Manage data on the cloud Manage receiving, location transfer Inspect
Inspect
incoming
incoming
goods
goods
Support multiple languages and inventory operations
HACCP compliance
Perform checks on workflows in Control production operations HACCP compliance
a timely manner including weighing and mixing Automation
Log core temperature of
Receive alert notifications of ingredients cooked food Print food and date labels
Connect with critical process Manage shipping operations
instruments Track and trace shipments HACCP compliance
Log hygiene status of premises
See Page 39.
27 28Our products and services The ‘SATO Blue’ An indicator bar that illuminates blue or red to show
operational status; now sported on display panels of all
indicator
SATO printer products as part of our image branding. Heat-resistant
For every distinct need labels
Consumables
Created from the customer, We have produced consumables for as long as we have printers, caring
for the customer about each and every label we provide customers. Our know-how
helps us develop new base materials and apply more efficient finishing
techniques to come up with products that best meet needs. With
demand growing for RFID in recent years, we now perform inlay design,
Video
tag/label conversion and quality inspection, all in our very own plant to
We visit customer sites across different industries, and produce custom RFID consumables better tailored to customers’
use what we discover, observe and learn there to invent operating environments. Custom RFID
tags/labels
new products and services. As a manufacturer, we pay
attention to the details of our product designs and
enforce strict quality control across our R&D, production Solve problems on site
and inspection processes. As a solutions provider, we
make sure our solutions are tested repeatedly on site Solution services
before delivering them to our customers.
Our Visual Warehouse* solution navigates workers and forklift operators within a
logistics warehouse in the shortest possible route using indoor locating technology.
The @Form paperless solution controls quality, documentation and traceability in food
production with the growing mandate for HACCP compliance. These customer-centric
Minimize downtime to speed business Location tracking solution for
greater warehousing efficiency
solutions we invent allow businesses to better deal with staffing shortages, productivity
limits, food safety concerns, and other challenges in our rapidly changing world.
Printers * V isual Warehouse is a trademark or a registered trademark of SATO Holdings Corporation
in Japan and other countries.
With product technology accumulated over 30-plus years, SATO designs and develops
printers to perform universally. They operate easily, print in multiple languages, connect to To support day-to-day operations Video
various interfaces, and minimize downtime for sites of operation when used together with our
IoT-based service that monitors printers 24/7 via the cloud.
Software
CL4NX
We help customers efficiently print and manage the label/tag data
they generate in their daily operations by developing and offering
Printer lineup for diverse business scenarios software that can be used to create layouts and centrally maintain
Label design software Cloud-based data
print data across multiple locations. management application
NEW
Providing field knowledge and expertise
PW208NX CT4-LX LR4NX-FA FX3-LX
Mobile printer optimized for Compact printer due to be Auto labeler engineered to fit Touch screen printer with Consultation
delivery, warehousing and released outside Japan into existing production lines Android OS that can run
other operations that require starting January 2020 in different setup orientations a variety of apps to support
Our field knowledge and expertise on auto-ID technologies and business
on-the-go printing for accurate label application work environments
processes can prove to be valuable advice for customers. It can improve on-site
operations. It can boost sales of a product by renewing its package design based
Compatible with SOS*, our cloud-based IoT service that ensures stable
on proper market research and strategies. These are more ways in which we
operation of printers through preventative maintenance
Service to design and print contribute towards a better and more sustainable world than by simply selling the
* SATO Online Services
packaging that helps sell products we produce.
the product
29 30Actions for sustainable business growth
Overseas
“Selling the solution, not the product”
(koto-uri) globally
Outside Japan, we benefitted from the growth in our base
business of printers and consumables to record highest-ever
revenue and higher year-on-year sales and profits in FY 2018.
We will focus on instilling the koto-uri approach thoroughly
and invest strategically in priority countries and talent Hayato Shindo
development to further step up growth of our global business. Executive Officer
President, SATO International Co., Ltd.
FY 2018 recap
In the past fiscal, we achieved new record-high in revenue group companies. We also created various opportunities
and increased both sales and operating income from a for employees worldwide to learn about SATO’s core
year ago as Asia kept up its strong performance and competence in genbaryoku and develop their awareness
Europe won deals substantial in size. We did not, however, of koto-uri.
meet the target figures we planned at the beginning of the Having large, global corporations as customers would
term as our China-related businesses slowed down due to increase our business presence around the world. We will
USA–China trade tensions and our consumables products build on the talks developed in the past year to convert
suffered from the soaring cost of paper materials. The fact them into actual sales in FY 2019 and propel ourselves
Sales and operating income
86,000 that our overseas group companies are taking longer than towards expanding sales and securing the trust of potential
(Millions of JPY) FY 2019–2021
4-year CAGR
Medium-term management plan expected to fully take up the koto-uri model to capitalize on alliance partners.
3-year CAGR
12.3 % business opportunities around us also contributed towards One of the markets we see growth potential in is food.
7.6 % 10,000
this shortfall. Food safety lapses (e.g., lack of allergen indication on
Build the foundation to 54,000 That said, we have definitely made progress with our labels) are driving demand for better food labeling as
koto-uri strategy in FY 2018 to initiate more business talks standards become stricter worldwide. This creates
“selling the solution” and 10-year CAGR 43,316
with large corporations at a speed that would have been favorable environment for us, particularly in Asia and
drive growth 7.5 % unthinkable in the past. This was possible because of the developing economies where improvements in quality of
4,700
systems/infrastructures we put in place that generated life are accompanied by higher expectations of safety.
20,978
new sales leads and fostered greater collaboration among
2,239
(FY) 2008 2018 2019 2020 2021 2025
Planned
Sales Operating income -1,801
31 32Actions for sustainable business growth — Overseas
Identify priority countries and invest strategically Target countries, areas, and industries of high potential,
Seeing how the shift from selling the product to selling the
solution has proved fruitful for our business in Japan, we
In the case of India and Vietnam, the needs for our
solutions center primarily on the manufacturing industry
and execute strategies and investments with speed
are planning to make the same transition outside Japan where measures for improving product traceability and
over the next three years. This will be by no means easy, production control are gaining traction. India, in particular,
but we cannot afford to stick to the status quo either, as it has an abundance of IT engineers in the country that Key strategies
would only land us in price wars, make us vulnerable to allows us to find the best partners to work with in
1. Optimize workforce and operations in focal areas 4. Strengthen global alliances
changes in our business environment and limit our growth. developing software that goes into our solutions. The
2. Lay groundworks to supplying products, services 5. Establish CRM (customer relationship management)
Now that megatrends are creating positive tailwind for our country is also home to many pharmaceutical companies and solutions system and other sales infrastructure Invest
business, we must waste no time in driving our strategy for that manufacture and export generic drugs, pointing to
3. Develop sales collaterals and functions to support
strengthening koto-uri to sell combinations of products demand for quality product labeling. To capture all these koto-uri
and services to customers based on their specific needs. opportunities and scale up our business, we will be looking
For this strategy to succeed, it is important that we to invest in building a new consumables production facility,
target and invest our resources effectively in countries with partnering with local companies, and acquiring the
promising growth prospects. I see tremendous business necessary professional talents. Countries/regions we will focus on
potential in the emerging nations in Asia with rapidly The US economy may not be growing as fast as India or
growing economies. This is because as their GDP Vietnam, but it boasts a titanic market size that keeps the
increases, their standards of living improve, leading to country atop the world’s GDP rankings. As headquarters of
greater needs for labor saving and food safety, which are many global corporate giants are here, we will work to offer
closely relevant to our auto-ID solutions business. We will more compelling propositions to these decision makers by
be focusing on India and Vietnam as our top priority expanding our local sales function and applying the strengths
countries in Asia, given their strong affinity with the SATO of our worldwide network that spans 27 countries/regions.
group business. Outside Asia, we have set the US as top We will also be looking out for M&As and new alliances while
priority on account of its enormous market size. setting up more places from which to supply consumables.
Selling the product Selling the solution Next stage in solutions
Top priority*
Japan Next level India, Vietnam, US
High priority
Move to selling solutions at the next level China, Thailand, Indonesia, Russia, The Philippines
Other countries/regions with SATO offices
Overseas Koto-uri in 3 years Argentina, Brazil, Germany, France, Italy, The Netherlands, Poland, Spain, Sweden, Switzerland, UK, South Korea,
Malaysia, Singapore, Taiwan, Australia, New Zealand, Mexico
Complete the transition
Do in 3 years what took 20 years in Japan * Determined based on macro data and considerations such as business affinity with SATO and supply chain maturity levels
33 34You can also read
